Correlation Between Microbot Medical and BlueScope Steel
Can any of the company-specific risk be diversified away by investing in both Microbot Medical and BlueScope Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microbot Medical and BlueScope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbot Medical and BlueScope Steel Limited, you can compare the effects of market volatilities on Microbot Medical and BlueScope Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microbot Medical with a short position of BlueScope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and BlueScope Steel.
Diversification Opportunities for Microbot Medical and BlueScope Steel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microbot and BlueScope is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and BlueScope Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel and Microbot Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microbot Medical are associated (or correlated) with BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of Microbot Medical i.e., Microbot Medical and BlueScope Steel go up and down completely randomly.
Pair Corralation between Microbot Medical and BlueScope Steel
Assuming the 90 days trading horizon Microbot Medical is expected to generate 1.25 times more return on investment than BlueScope Steel. However, Microbot Medical is 1.25 times more volatile than BlueScope Steel Limited. It trades about 0.08 of its potential returns per unit of risk. BlueScope Steel Limited is currently generating about 0.1 per unit of risk. If you would invest 81.00 in Microbot Medical on September 7, 2024 and sell it today you would earn a total of 11.00 from holding Microbot Medical or generate 13.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microbot Medical vs. BlueScope Steel Limited
Performance |
Timeline |
Microbot Medical |
BlueScope Steel |
Microbot Medical and BlueScope Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microbot Medical and BlueScope Steel
The main advantage of trading using opposite Microbot Medical and BlueScope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, BlueScope Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlueScope Steel will offset losses from the drop in BlueScope Steel's long position.Microbot Medical vs. Apple Inc | Microbot Medical vs. Apple Inc | Microbot Medical vs. Apple Inc | Microbot Medical vs. Apple Inc |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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